zdl_cryptofandomcom-20200214-history
Synthetix Network Tokens (SNX)
Basics * DeFi * Fka Havven but rebranded in November of 2018. * First planned out to launch on EOS but moved to Ethereum instead. They wrote a blog post (27-8-2019) on why EOS (and Tezos) were unsuitable. * A decentralized platform on Ethereum for the creation of Synths: on-chain synthetic assets that track the value of real-world assets * From Messari: "Synthetix is a decentralized synthetic asset platform that provides on-chain exposure to real-world currencies, commodities, stocks, and indices. These synthetic assets (Synths) are backed by Synthetix Network Tokens (SNX) locked into a smart contract as collateral. Synths track the prices of various assets, allowing crypto-native and unbanked users to trade P2C (peer-to-contract) on Synthetix. Exchange without liquidity limitations. Previously, this project was launched as Havven (HAV), a decentralized stablecoin protocol." Token Sale * From Token Tuesdays (3-9-2019: "At inception, Havven raised $250k in a seed round supplemented by a larger $30M ICO round priced at a reported base rate of $0.67/SNX. Lead by Synapse Capital" * From Messari: "100,000,000 SNX were issued in March 2018. 60% were allocated to investors in the Main Sale and the EOI Sale and 40% was allocated to the project treasury, with 3% reserved for Bounties and Marketing Incentives, 5% reserved for Partnership Incentives, 12% allocated to the foundation and 20% allocated to the team and advisors. The foundation allocation vested quarterly for 12 months and the Team and advisors allocation is vesting quarterly for 24 months. A new monetary policy was introduced in 2019. This new policy introduces an inflationary supply to reward active stakers. Each year, for 5 years, the total rewards will be cut in half, starting at 75,000,000 SNX for the first year. The total supply will eventually reach 245,312,500 SNX by 2024." Token * From Token Tuesdays (3-9-2019: "SNX holders can lock their tokens as collateral to mint new synthetic assets (Synths), which track the prices of fiat currencies, commodities, stocks, and indices. Everytime a Synth is generated, a transaction fee of 0.3% is accumulated and ultimately distributed to holders with locked SNX in the form of sUSD (Synthetix’s native stablecoin). In the first year that Synthetix was live, only 300 users out of the 75,000 token holders were locking SNX into the system. While it still resulted in 40% of the total supply locked as collateral, the team realized that this small incentive was not large enough to spur widespread growth in the system. Back in February, Synthetix announced that they will be implementing an inflationary monetary policy as an incentive to bootstrap network effects. Over the next five years, the total supply will increase from 100M to around 250M SNX with inflation diminishing over time." * Since that Token Tuesdays about SNX, Synthetix has seen a significant amount of growth in the protocol and has surpassed Token Tuesday's upper valuation of $1.20. The following is from their follow up (27-11-2019): "When we covered SNX back in September, the price was sitting at around $0.36 with total value locked hovering at around ~$40M USD. Now, Synthetix has soared past Compound to #2 on DeFi Pulse in terms of total value locked with over $166M in nominal value, representing a +315% increase in total value locked. In terms of token price, the current value of SNX sits at around $1.34, resulting in a +272% increase in price since September. SNX locked has increased a moderate amount in the past 3 months from 99.3M SNX locked to 123M SNX locked (+23.86% increase in the past 90 days). This can largely be due to a combination of new stakers and new SNX being minted as part of their new issuance policy. '' ''For those unfamiliar with Synthetix’s new issuance policy, there’s now a base issuance rate to SNX stakers on top of the fees accrued on the exchange. With that said, we can theorize that stakers are reinvesting their native issuance back into the protocol to compound their returns. As issuance continues to take place, we can expect that the total amount of SNX locked will increase in tandem as users continue to look to maximize their potential returns in the future." * From this blog (10-2-2020): "Incentivizing Uniswap pool liquidity is a high priority (especially considering the reliance), but using inflation to this extent initially as the method to achieve this will likely have pretty brutal effects on the META price – Using SNX as the example, there’s still yet to be any SNX unlocked from the incentivization pool - this starts in March, 2 note SNX price was $0.05 at that point last year, it’s now $1, my guess is there’s a large number of people who didn’t expect SNX to appreciate so much when they first locked their SNX - As this SNX is unlocked there’s going to be a continuous stream of SNX likely pointed towards the market." * SNX announced (24-9-2019) the smoothing of their inflation schedule. Tech * From Token Tuesdays (3-9-2019: "In essence, synthetic assets represent a combination of securities to simulate the price of a different underlying asset. As such, users can gain exposure to any supported derivative without ever having to maintain custody of the underlying asset itself. This allows users to quickly swap between abstract assets (say ETH to APPL shares) without experiencing any slippage, delays or exchange withdraw fees. By using Mintr, synthetic assets called Synths are created by staking Synthetix Network Tokens (SNX) as collateral. Synthetix uses a private oracle to pull real-time information from credible financial market resources. As it stands today, the protocol currently supports synthetic fiat currencies, digital assets (long and short) and commodities. As it currently stands, Synthetix has 94.8M SNX (~70% of the total supply) locked in the system, up from 37.36M since March 2019. ''(Update 17-12-2019: 80% locked) ''Earlier this year, the staking rate sat at around 40% of total SNX. With the new monetary policy, SNX saw a surge of new stakers on the network looking to claim the newly minted SNX coming into the ecosystem. This resulted in nearly 70% of SNX staked, according to DeFi Pulse. Over the next five years, we’re assuming that as the inflation rate continues to decrease, we will likely see a slight decrease in the overall percentage of SNX staked." * Since that Token Tuesdays about SNX, Synthetix has seen a significant amount of growth in the protocol and has surpassed Token Tuesday's upper valuation of $1.20. The following is from their follow up (27-11-2019): "Since our last post, Synthetix has added a number of new synth options, further increasing the use-cases that make the platform so attractive. In particular, the most recent release included a DeFi basket, effectively allowing investors to purchase a token that was weighed by popular DeFi assets like LINK, MKR, ZRX, SNX, REN, LRC, KNC, BNT, and MLN (determined through Twitter Polling). Similarly, Synthetix recently re-introduced inverse synths, a derivative that effectively allows investors to short any supported assets. In a market where shorting assets are often restricted to sophisticated investors comfortable leveraging margin trading or futures contracts, inverse synths provide an intuitive mechanism for retail investors to capitalize on short swings." * From Messari: "Synthetix is a decentralized trading platform for synthetic assets that looks to alleviate liquidity and slippage issues of DEX’s through a pooled collateral mechanism that enables users to convert from one synthetic asset (Synth) to another directly with the contract. Synthetix currently supports assets that track the price of fiat currencies, cryptocurrencies and commodities. Synths are backed by the Synthetix Network Token (SNX), which is staked as collateral to issue Synths. SNX holders who stake their tokens receive fees generated through trading activity on synthetix.exchange from which the value of the SNX token is derived. All Synths are backed by SNX tokens. Synths are minted when SNX holders stake their SNX as collateral using our dApp, Mintr. They’re currently backed at a 500% ratio (Update 17-12-2019: ''Users looking to create derivatives (Synths) must post 750% collateral in the form of SNX) to ensure the system is buffered from major price shocks, however, this may be raised or lowered in the future. SNX stakers incur debt when they mint Synths, and to exit the system (i.e. unlock their SNX) they must pay back the debt by burning their proportion of Synths they minted. '' SNX holders are incentivized to stake their tokens and mint Synths in several ways. Firstly, there are Synth exchange rewards. These are generated whenever someone exchanges one Synth to another (i.e. on Synthetix.Exchange). Each trade generates a 0.30% trading fee that is sent to a fee pool, available for SNX stakers to claim their proportion each week. The other incentive for SNX holders to stake/mint is SNX staking rewards, a product of Synthetix’s inflationary monetary policy. From March 2019 to March 2024, the total SNX supply will increase from 100,000,000 to 245,312,500, with an annually halvening. These SNX tokens are distributed to SNX stakers on a pro-rata basis provided their collateralization ratio does not fall below the optimal threshold." DAO Governance * From Token Tuesdays (25-12-2019): "Synthetix, the industry’s largest synthetic asset issuance protocol, announced its plan to transition to a DAO earlier this week in order to create an inclusive mechanism for token holders to govern the protocol and its underlying treasury. With this in mind, the announcement outlines a few key components necessary: # Legal & Operational - In the past, it has been common practice to set up a non-profit foundation to coordinate protocol development within decentralized systems. This was due to the lack of robust frameworks for distributed fund management. Thanks to the rise of new DAO structures such as Moloch, Synthetix can now leverage an audited foundation for distributed treasury management, grants, and governance. # Protocol Changes - As it stands today, the Synthetix team is largely responsible for implementing protocol changes while receiving input from the community via Synthetix Improvement Proposals (SIPs). With that, the team is working on developing a protocol DAO to allow community members to be more involved with the SIP process. While it would seem that protocol changes and product improvements are interchangeable, there’s actually a clear distinction between the two. To give you a better understanding, Synthetix.Exchange and Mintr are some of the products that exist on the Synthetix Protocol. Drawing a parallel, Uniswap’s front-end exchange (the product) geoblocked a handful of countries while the core protocol itself remains censorship-resistant and accessible by anyone. As such, the goal with Synthetix DAO is to decentralize and eliminate any single point of failure from the products that exist on top of the protocol. This can be accomplished through grants from the DAO and by ensuring that multiple products emerge outside of what’s been developed by the core team." '' Roadmap * Roadmap found on Messari: * From Token Tuesdays (3-9-2019: ''" In the near future, the core team has announced expanded Synth sets including S&P 500 indices, DAI to sUSD conversions and open-sourced lending on protocols like Compound." Competitors * From Token Tuesdays (3-9-2019: "Market Protocol and FOTA are the first projects that come to mind, each with slightly different variations on services offered and how their respective tokens play into their ecosystem." Critiques (9-2019) * Will have competitors who tackle the same problems * Demand for blockchain-based synthetic assets is still relatively small. "As it currently stands, the assets being represented on the platform are ones which are relatively easy to acquire through traditional mediums such as secondary exchanges like Binance." * "Only listed on a few niche secondary exchanges with less than $10k of active volume on the most popular trading pairs." Team, investors, partners, etc. * Kain Warwick; founder, is friends with EthHub * Jordan Momtazi; "has been a core member of the Synthetix team from day one" * Part of the DeFi Network * Invested in by SVK Crypto * "At inception, Havven raised $250k in a seed round supplemented by a larger $30M ICO round priced at a reported base rate of $0.67/SNX. Lead by Synapse Capital" * From DeFi Weekly #52 (27-11-2019): a16z invested $250k in Synthetix.Category:Coins/Tokens